Last week, billionaire Li Ka-shing made his first bet on the city's residential property market in years, agreeing to pay HK$1.95 billion ($251 million) for a site in the New Territories. At the same time, he's selling The Center, a 73-story tower valued at HK$35 billion, and continuing apace with investments in Europe.

Hong Kong 2015 GDP growth

2.4%

Home prices have tumbled from their peak last September, but are up about 7 percent from their March trough as largely local buyers snap up apartments, some quite literally the size of a parking space. In a city obsessed by property, real estate dominates dinner-table talk, with even octogenarian billionaire Lui Che-Woo saying he's baffled despite his more than 50 years in the market.

Prices should show signs of cooling. Hong Kong's GDP is slowing, population growth is moderating and affordability is among the world's worst. Plus with an exchange rate that's pegged to the dollar, any rate hike in the U.S. would be felt instantly.

Going Up

After a small blip, Hong Kong property prices are on the rise, again

Source: Bloomberg

Factor in the amount of new supply about to hit the market and analysts including CLSA's Nicole Wong say prices must surely head south.

There's one very big reason, however, why that may not happen. It's called the Pearl River Delta, a low-lying area surrounding the Pearl River estuary, where that river flows into the South China Sea.

It's emerged as a massive manufacturing hub, overtaking Tokyo to become the world's largest urban area in both size and population. The nine largest cities of the delta, including Shenzhen, Guangzhou, Foshan and Jiangmen, have a combined population of more than 57 million. A 25-mile tunnel, road and bridge structure connecting Hong Kong with Macau and Zhuhai will, if completed next year, cement the megalopolis's prominence, cutting travel time between the mainland and the two special administrative regions to 30 minutes from more than three hours.

Megacity

The Pearl River Delta had a population of 42 million in 2010, more than many countries

Source: World Bank

Those numbers are attention-grabbing. In a presentation last year, HSBC Chief Executive Officer Stuart Gulliver noted that the Pearl River Delta, with Hong Kong at its center, would rank as the world's largest banking-city cluster by 2025.

Much of Hong Kong's recent buying spurt has been domestic -- according to Bloomberg Intelligence analyst Patrick Wong only about 4 percent of total residential transactions in August were subject to the buyers' stamp duty that's levied on non-residents. But the city, set against the broader backdrop of the PRD, is prime aspirational territory. It has a cachet others in the PRD don't -- move there, and you've really made it.

Whether it's rational or not, you can bet property prices in Hong Kong are headed just the one way.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

(Corrects tower description in second paragraph.)

Wong notes that since 2009, Hong Kong primary property values have contributed to about 5 percent of GDP. She predicts prices will fall 7 percent next year and another 5 percent in 2018.

Hong Kong's population has gone from just under 4 million in 1970 to about 7.3 million currently. That's in a very limited space, considering just 7 percent is zoned for residential use and country parks take up most of the land.